I don’t see it that way. ICBA and American Bankers will go to the wall on this one. B of A has TARP money if I am not mistaken and that are part of the Obama support group. I think B of A was little more than a publicity stunt insitgated by the Obama crowd.
The stakes here are far beyond huge and I don’t see the community bankers folding on this one. I can’t imagine the FDIC is too thrilled about such an idiodic proposal either. Such a ploy will put the FDIC fund at even greater risk, just after banks paid three years premiums IN ADVANCE.
Maybe so...but how does it benefit to do nothing? I certainly dont favor what Obama and Congress are doing. But do you really think nothing should be done?
I agree 100% that barrowers signed a contract. However, the terms of that contract was made under very different circumstaces. A $1500 mortgage payment may not have been a problem for someone to pay in 2004. Now in 2010, that person has been laid off and income is slashed significantly. If he can no longer afford the payment, what do you want him to do? Skip the grocery store and skip the doctor appointments just so he can pay a mortgage he is now $100,000+ underwater?
Either way, the banks are going to be left with toxic debt they will end up writing off anyway. If a house today is $100,000 underwater...it aint recoving that equity for decades. Lets be realistic here.
That money is long gone. The only question is when and how is it going to be written off.